Patents and innovation

PATENTS AND INNOVATION: TRENDS AND POLICY CHALLENGES

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Pursuant to Article 1 of the Convention signed in Paris on 14th December 1960, and which came into force on 30th September 1961, the Organisation for Economic Co-operation and Development (OECD) shall promote

policies designed:

? To achieve the highest sustainable economic growth and employment and a rising standard of living in member countries, while maintaining financial stability, and thus to contribute to the development of the world economy.

? To contribute to sound economic expansion in member as well as non-member countries in the process of economic development; and

? To contribute to the expansion of world trade on a multilateral, non-discriminatory basis in accordance with international obligations.

The original member countries of the OECD are Austria, Belgium, Canada, Denmark, France, Germany,

Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland,

Turkey, the United Kingdom and the United States. The following countries became members subsequently

through

accession

at the dates indicated hereafter: Japan (28th April 1964), Finland (28th January 1969), Australia (7th June 1971),

New Zealand (29th May 1973), Mexico (18th May 1994), the Czech Republic (21st December 1995), Hungary

(7th May 1996), Poland (22nd November 1996), Korea (12th December 1996) and the Slovak Republic

(14th December 2000). The Commission of the European Communities takes part in the work of the OECD

(Article 13 of the OECD Convention).



? OECD 2004 Applications for permission to reproduce or translate all or part of this material should be made to: OECD Publications, 2 rue Andr?-Pascal, 75775 Paris Cedex 16, France.

TABLE OF CONTENTS

1. Introduction ..................................................................................................................... 7 2. Economic issues raised by patents .................................................................................. 9 3. Recent trends in patenting in OECD countries ............................................................. 11 4. The changing context: evolving innovation processes and markets for technology ..... 15 5. Recent changes in patent regimes ................................................................................. 17 6. Intellectual property at public research organisations ................................................... 19 7. Biotechnology, patents and diffusion............................................................................ 22 8. Software and services.................................................................................................... 24 9. Conclusion: Policy issues and options .......................................................................... 26

9.1 Encourage the development of markets for technology .......................................... 26 9.2. Ensure access to basic inventions ............................................................................ 27 9.3. Revisiting the working of the patent system............................................................ 28

REFERENCES ............................................................................................................................ 31

EXECUTIVE SUMMARY

Patents play an increasingly important role in innovation and economic performance. Between 1992 and 2002, the number of patent applications filed in Europe, Japan and the United States increased by more than 40%. The increasing use of patents to protect inventions by businesses and public research organisations is closely connected to recent evolutions in innovation processes, the economy and patent regimes. Scientific and technological advances have created new waves of innovation, notably in information and communications technology (ICT) and biotechnology, and innovation processes themselves have become centred less on individual firms and more dependent on interactions among global networks of actors in the public and private sectors. Shifts in the legal and regulatory framework of patent regimes have resulted in more expansive domains of patentable subject matter (patent regimes in many countries now include biotechnology and software), and more robust and more valuable patents.

Changes in patent policy in OECD countries over the past two decades have fostered the use and enforcement of patents with the aim of encouraging investments in innovation and enhancing the dissemination of knowledge. Despite these reforms, few systematic economic evaluations have been carried out to better inform policy choices. To what extent have changes in patent policies over the past two decades been beneficial to innovation and technology diffusion? What particular aspects of patent policy in OECD countries can be seen as successful, or have failures occurred? These questions are central to this report, which covers a range of areas, and highlights some unresolved issues that policy makers should address in the near future:

? Markets for technology are increasingly important for the circulation of knowledge. Patents play a pivotal role in the development of technology transactions. Governments need to improve their knowledge of the functioning of markets for technology and the effect of such markets on economic performance in order to support their development in the most socially beneficial directions.

? Encouraging patenting by public research organisations (PROs) has led to increased commercialisation of inventions derived from publicly funded research - hence generating greater benefits to society - but may have made it more difficult for researchers to access certain types of basic science. Governments should ensure access to basic inventions, for instance by monitoring patenting and licensing practices at PROs, and by reinstating and clarifying the exemption for research use, which is now being restricted.

? In biotechnology, the surge in innovation, notably by start-ups, benefited greatly from the possibility of obtaining patent protection, which attracted the capital needed in this area. In certain upstream fields, such as genetic material or genetic testing, there are cases where patents might still impede access to technology. The quality (novelty) and breadth of patents in these areas need to be reviewed. Governments should explore ways to encourage alternative means of disseminating knowledge, such as the public domain, and to improve the diffusion of patented inventions, e.g. through the promotion of patent pools and the publication of licensing guidelines.

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